Health insurance costs for US employers projected to hit 24-year high

Employer-provided health insurance costs are projected to see their largest increase in over two decades. Reports from Marsh and the Business Group on Health indicate that total health benefit costs per employee are expected to rise by an average of 8.2% in 2027, with some projections reaching as high as 9.5% or 11% if no corrective actions are taken.

Several factors are driving these rising costs, including the high demand and price of GLP-1 weight-loss medications, rising prices for hospital care and prescription drugs, and the use of artificial intelligence by providers to increase claims through improved documentation. Additionally, the Independent Dispute Resolution provision of the No Surprises Act has resulted in higher-than-predicted provider payments.

To mitigate these expenses, some employers are considering plan design changes, such as increasing deductibles or reducing coverage for expensive treatments like GLP-1 drugs. Aon estimates that without intervention, the average cost per employee could exceed $19,000.